Temporary Work and Weak Wage Growth Will Underpin UK Employment

Employment in the UK economy will grow in the first quarter, according to a quarterly labour outlook, as weak wage growth and an increasing number of part-time workers underpins the country's fragile labour market.

The latest Labour Market Outlook report, compiled by the Chartered Institute of Personal Development and consultancy KMPG, shows a positive balance in favour of employers looking to increase staffing levels for the fourth consecutive quarter in the first three months of the year.

Its balance between those looking to increase staffing levels and those looking to decrease in the first quarter sat at +5 percent, though this was down from +7 percent in the quarter before.

"Overall, the spare capacity implied by the research underlines further the theory that the shift towards more part-time employment and weak wage growth have helped to support employment levels," said, Gerwyn Davies, Labour Market Adviser at the CIPD.

"However, it should also be added that the unemployment and employment rate measures are the more accurate indicators, as they also take account of the continuing expansion in the labour force.

"Nonetheless, both of these measures remain well below pre-recession levels, although it should be noted that both have made positive gains in recent months."

Wages have been the subject of political debate recently. Gripped by stagnant earnings growth and a high cost of living, earnings are now at the same level in real terms as they were a decade ago.

There have been calls for the implementation of a "living wage" or an increase in the minimum wage to help offset the effects of price inflation that outpaces the rise in earnings.

"As an experiment, we included a small number of questions asking employers about their use of workers on the current National Minimum Wage rates as well as whether they had adopted the 'living wage' in this report," said CIPD's Davies.

"The CIPD will explore the issue further in future reports, but this initial research suggests that the most popular response among employers would be to simply absorb the costs (reported by 36 percent of employers).

"However, on the flip side, almost one in five (17 percent) said that they would be forced to make redundancies."